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Tyson posts 2Q profit of $68M; says beef, pork and chicken all perform well

Tyson posts 2Q profit of $68M; says beef, pork and chicken all perform well

Tyson Foods Inc., the world's largest meat company, reported a profit Monday of $68 million (euro50 million) for its latest quarter, a number that indicates the company is pulling out of the doldrums.
Tyson had lost $127 million (euro93.35 million), 37 cents per share, in the same period a year ago. Its profit of 19 cents per share beat expectations of analysts surveyed by Thomson Financial, who projected a profit of 11 cents per share on revenue of $6.4 billion (euro4.7 billion).
Tyson had sales of $6.5 billion (euro4.78 billion) for January-March fiscal second quarter, compared to $6.3 billion (euro4.63 billion) a year before.
The company also revised its earnings guidance for the fiscal year, saying that it expects a profit of between 65 cents and 90 cents per share. Tyson's previous profit estimate was for a profit between 50 cents and 80 cents per share.
For the past six months, Tyson earned $125 million (euro91.88 million), or 35 cents per share, compared to a loss of $88 million (euro64.68 million), or 26 cents per share, in the comparable period in its last fiscal year. Sales were $13.1 billion (euro9.63 billion) for the six months, compared to $12.7 billion (euro9.33 billion) a year ago.
Tyson President and Chief Executive Officer Dick Bond said the company is improving on all fronts.
"Quarterly operating income improved $300 million (euro220.51 million) over the same period last year," Bond said. "All segments were profitable, and it was our strongest performance since the fourth quarter of fiscal 2005. Our beef segment is back in the black, and our pork business is well within our target margin objectives. Chicken showed improvement despite a substantial year-over-year increase in grain costs."
Concerns over mad cow disease led Japan, South Korea and other countries to stop imports of U.S. beef. Japan is again buying U.S. cattle, but only those 20 months or younger. Tyson vice president Greg Lee said cows 30 months and younger will be shipped to South Korea and that that standard could apply to Japan in the future.
"Only time will tell," he said.
Bond said margins in beef improved and that sales to South Korea should resume within the next few weeks.
"Our beef segment is the real turnaround story for the quarter," Bond said.
Beef accounts for almost half of Tyson's sales and the company had $3 billion (euro2.21 billion) in beef sales in the second quarter. Average sales prices were higher, volume was up and the segment saw better cost controls.
Chicken, which accounts for nearly one third of Tyson's business, saw slightly lower sales volume but increased revenue. The company has closed some poultry production plants, which brought down supply, and increased grain costs have helped drive price increases. Bond said the company is in a good position with the summer grilling season on the horizon, even if it won't surge in market share.
"I believe that supply and demand is going to be in pretty good balance. You can't bring that many more chickens to market," Bond said.
Lee said no more chicken plant closings are expected any time soon.
Pork, about 12 percent of Tyson's sales, saw higher sale prices and strong export sales. Bond said 195 hogs that had eaten feed from China that had been treated with the banned chemical melamine did go to a Tyson pork plant in Nebraska. Bond said there is no indication of harm to humans and that the meat was not recalled.
In prepared foods, which account for just under 10 percent of Tyson revenues, Lee said the company has seen higher sales and product mix improvements.